Erez industrial zone to be closed

Minister of Industry Trade and Labor Ehud Olmert: All Israeli factories at Erez will be moved to Ashkelon, Sderot and Netivot.

The first act of disengagement from the Gaza Strip is underway. Minister of Industry Trade and Labor Ehud Olmert announced today that all Israeli factories at the joint Israeli-Palestinian industrial zone at Erez, at the northern edge of the Gaza Strip, would be moved to industrial zones in Ashkelon, Sderot and Netivot. He added that the government would subsidize the move and employees' salaries.

Olmert, the strongest support of the disengagement plan, justified the decision by saying, "The security uncertainty of the past two months and the irregular admittance of Palestinian workers to Erez has caused heavy losses to Israeli entrepreneurs in the industrial zone."

Olmert stressed, "The government intends to help move the factories. A joint Ministry of Finance-Ministry of Industry team will prepare an aid package for the factories to cover the cost of the move, working capital, and salary subsidies."

The ministry plans to subsidize salaries by NIS 2,000 a month for several years for employees of factories that promise employment for this period, The subsidy will cover the difference between salaries of Palestinians and the minimum wage in Israel, and is also intended to prevent the transfer of factories to China.

A top Ministry of Industry official said, "The Ministry of Finance doesn’t like subsidizing salaries at this stage. But unless we help the factories to move, they will go bankrupt and be entitled to compensation."

Manufacturers Association textile and fashion division chairman Ramzi Gabbay, who is also CEO of Offis Textile (TASE:OFIS), said, "Olmert personally promised me that he would ensure a NIS 2,000 a month salary subsidy for new employees."

Published by Globes [online] - - on June 8, 2004

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